Equity Capital Markets vs. Debt Capital Markets
Within Investment Banking, there are a variety of products and industries that individuals have the opportunity to focus on. Some summer internships offer general analytics programs, where one has the opportunity to explore different groups within the bank. However, some programs require analysts to become a specific product or industry. Therefore, one needs to investigate different groups. Equity Capital Markets and equity financial markets are examples of product groups. Both groups help their clients to raise funds but in different ways. As the name implies, in the Equity Capital market group, banks focus on increasing customer equity. The largest debt group in debt increases customer debt. “Increasing Equality”? “Increasing Debt”? In the following sections, I will discuss what those sentences mean and what makes these product groups different.
Equity Capital Markets
The Equity Capital Markets Group is a cross between selling and trading and investing in a bank. Being a member of this group means that one will spend most of their time advising clients about raising equity. Increasing equity means that a company sells a certain amount of ownership to a company in exchange for money.
The Equity Capital Market Group can be divided into three groups:
– Equity Foundation: This group engages companies in raising deals and funds such as IPOs.
– Syndicate: This team works with other banks to agree. This is necessary because most financial deals involve many banks.
– Flexible Bonds: Flexible bonds are a loan that is converted into cash when the company’s stock price reaches a certain number. Therefore, the group works with companies to raise money using flexible bonds.
As an analyst at Equity Capital’s marketing team, one has the opportunity to perform a variety of tasks. One job involves making slides in the market of an industrial group that includes a client business. In addition, the analyst will also create slides based on previous clients who hire a bank to raise money. An analyst can show these slides to potential customers as a way to show how their bank has helped a former client grow the money they want without giving too much ownership. Also, one performs a shareholder analysis, which includes an analysis of the company’s current shareholders and the percentage of shareholders in the company. Equity Capital Markets incorporate specific financial models into the value of potential customers through the same companies or by analyzing how company ownership changes after the offer.
Lastly, when working for Equity Capital markets, the analyst makes deals such as initial public offering (IPO). In addition, one does the following, when the company is already in the public domain and wants to raise more money for equity. Another type of agreement is a second contribution, in which the company does not generate additional revenue but investors sell their shares to other investors.
Similar to Equity Capital Markets, Market Capital Markets are a combination between trading and trading and bank investment. However, this is the only similarity between the two. Debt Markets Markets are a type of market where companies earn money by trading securities. These securities include corporate and government bonds. When a company increases its debt, it means that it borrows money and pays interest on those loans. This is different from equality because there is no decrease in ownership.
As a Credit Market analyst, one is responsible for four major tasks:
– Performing customer credit releases.
– Focusing clients on debt repayment. We need to be able to answer their questions.
– Update market slides for other groups.
– Create cases with recent deals.
In the first project, much of the work is done by creating memos for sales teams. These memos provide the team with statistics and useful sales analysis that is offered to investors. When a credit card is filed, potential buyers will come to the bank and ask for advice on interest rates and the benefits of getting a new loan. For example, a company can claim to have $ 400 million in debt growing over five years. As interest rates have declined, the company believes it can make money by raising debt at a lower interest rate and using the proceeds to repay existing withdrawals. Is this a good plan? What interest rate is required for them to excel? These are the kinds of questions a Capital Markets analyst needs to be able to answer. Reviewing market slides and conducting case studies requires an analyst to spend time making requests made by other sectors and product groups.
Credit Mortgage Markets have a much smaller financial modeling function than Equity Capital markets. The volume business is higher than Equity Capital markets as global credit markets are larger than global equity markets. As a result, Debt Capital’s marketing team operates in a fast-paced environment as deals occur very quickly. In addition, the Debt Capital market group has less risk than the Equity Capital Markets group. Therefore, Equity Capital markets and major financial markets are two different groups of product analysts that have the potential to work in them.